UK nuclear industry faces prospect of Euratom exit

27 January 2017

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The UK intends to leave the European Atomic Energy Community (Euratom), according to explanatory notes to a bill the government published yesterday authorising Brexit. The notes state the bill empowers the prime minister to leave both the European Union and Euratom.

The peaceful use of nuclear energy within the EU is governed by the 1957 Euratom Treaty. The Euratom Community is a separate legal entity from the EU, but it is governed by the bloc's institutions.

Nuclear power plants generate almost 30% of the electricity produced in the EU - from 130 reactor units in operation in 14 EU countries. Each EU country decides alone whether to include nuclear power in its energy mix or not, but Euratom establishes a common market in nuclear goods, services, capital and people within the EU.

The Euratom framework also includes nuclear cooperation agreements with third party countries, including Canada, Japan and the USA. It facilitates UK participation in long-term research and development (R&D) projects, and it also provides a framework for international nuclear safeguard compliance.

Politics

The government published the bill after the Supreme Court ruled this week that parliament - not just the government alone - must vote to trigger Article 50 of the Lisbon Treaty, which starts the formal process of the UK leaving the EU. The European Union (notification of withdrawal) bill states as its aim to "confer power on the prime minister to notify, under Article 50(2) of the treaty on European Union, the United Kingdom's intention to withdraw from the EU".

The notes add: "Clause 1(1) provides power for the Prime Minister to notify the European Council of the United Kingdom's intention to withdraw from the European Union. The power that is provided by clause 1(1) applies to withdrawal from the EU. This includes the European Atomic Energy Community ('Euratom'), as the European Union (Amendment) Act 2008 sets out that the term "EU" includes (as the context permits or requires) Euratom (section 3(2)). Clause 1(2) provides that the powers in clause 1(1) are conferred regardless of any restrictions which may arise from any other legislation, including the European Communities Act 1972."

The government stressed that the notes to the bill, "as introduced in the House of Commons on 26 January 2017, have been prepared by the Department for Exiting the European Union in order to assist the reader of the bill and to help inform debate on it. They do not form part of the bill and have not been endorsed by Parliament".

The bill is due to be initially debated by Members of Parliament on 31 January and clear the Commons on 8 February, after which it will move to the House of Lords.

The UK voted in favour of Brexit in a national referendum held on 23 June last year. The Leave campaign won with 52% of the vote, against the Remain campaign with 48%. Turnout was 71.8%, with more than 30 million people voting.

Prime Minister Theresa May has stated her government will begin the formal process of quitting the EU by the end of March.

Industry

In response to the bill, Tom Greatrex, chief executive of the Nuclear Industry Association (NIA), said the UK nuclear industry has "made it crystal clear" to the government that its preferred position is to maintain membership of Euratom.

Greatrex said: "The nuclear industry is global, so the ease of movement of nuclear goods, people and services enables new build, decommissioning, R&D and other programs of work to continue without interruption. However, if the UK ceases to be part of Euratom, then it is vital that the government agrees transitional arrangements, to give the UK time to negotiate and complete new agreements with EU member states and third countries including the US, Japan and Canada who have Nuclear Cooperation Agreements within the Euratom framework. The UK should remain a member of Euratom until these arrangements are put in place."

Peter Haslam, NIA's head of policy, noted that the government has stated leaving Euratom is a result of leaving the EU because, "they are uniquely legally joined".

In consultation with its members, the NIA submitted written evidence to the Department for Business, Energy and Industrial Strategy select committee's wider inquiry into the impact of leaving the EU on the energy industry in December.

Haslam said: "The NIA previously established a working group looking at the impact of leaving the European Union on our industry, to inform and reinforce our discussions with government and also with European institutions through our membership of Foratom." Foratom is the nuclear trade body for the EU.

The working group will be meeting on 7 February, and this will help inform the case the NIA put to government in relation to transitional arrangements, Haslam said.

Some media reports suggested that the UK's new nuclear power plant projects - owned by EDF Energy, Horizon Nuclear Power and NuGeneration - will be delayed by a government decision to quit Euratom.

EDF Energy and its partner China General Nuclear plan to build two European Pressurised Water reactors in Somerset. NuGen, the UK joint venture between Japan's Toshiba and France's Engie, plans to build a nuclear power plant of up to 3.8 GWe gross capacity at Moorside, in West Cumbria using AP1000 nuclear reactor technology provided by Westinghouse Electric Company, a group company of Toshiba. Horizon, a 100% subsidiary of Hitachi Ltd, plans to deploy the UK Advanced Boiling Water Reactor at two sites - Wylfa Newydd, which is on the Isle of Anglesey, and Oldbury-on-Severn, in South Gloucestershire.

A spokesman for Horizon told World Nuclear News (WNN): "Whilst the UK's withdrawal from Euratom would present issues that would need to be addressed we are confident these can be resolved on a timescale that keeps us on schedule to successfully deliver our lead project, Wylfa Newydd. The government has indicated that it is determined to ensure there are no negative impacts from withdrawal and we welcome this commitment."

Law

Although the Euratom Community and the EU share the same institutions, the two never actually merged - the former has always had a separate legal character.

Jonathan Leech, senior commercial and nuclear energy lawyer at Prospect Law, told WNN there is no need for the UK to exit Euratom in two years, "with all the harm that may do to the UK nuclear industry". There is an "entirely justifiable alternative", he said.

"The Euratom treaty has a separate exit process that need not be triggered at the same time as triggering exit from the EU. Despite this, the government seems to have simply accepted that the UK must leave Euratom at the same time as leaving the EU. This appears to be driven by political expediency. Remaining in Euratom appears to be a red line, as it would require the UK to continue to accept the jurisdiction of the European Court of Justice in relation to nuclear matters.

"Even if the UK does still ultimately leave Euratom, this is a tactical own goal. The UK will have to negotiate whilst standing on a cliff edge. Once the UK triggers the Euratom equivalent of Article 50, the UK will be excluded from Euratom after two years. Any replacement arrangements would have to be negotiated in the knowledge that the UK has no real choice other than to reach agreement within that period," Leech said.

It may not be possible to put in place bilateral nuclear cooperation agreements with all countries with which the UK currently cooperates and trades in the nuclear industry, he added.

"If long-term Euratom membership is politically unacceptable, the alternative is to delay triggering a Euratom exit until the UK has fully explored and progressed negotiation of replacement arrangements, to the point where government and industry can be confident that those arrangements will be ready to go live within the two-year exit timetable, so avoiding potentially serious harm to the industry," he said.

Vince Zabielski, a senior lawyer at Pillsbury Winthrop Shaw Pittman, noted that none of the current new build projects in the UK is a British design, and that most are reliant on foreign technology that is accessible only via existing bilateral treaties through Euratom.

"If the UK leaves Euratom before new stand-alone nuclear cooperation treaties are negotiated with France and the United States, current new build projects will be placed on hold while those stand-alone treaties are negotiated," Zabielski told WNN.

"To avoid delays, the best path forward for the UK and its nuclear trading partners would be a controlled exit from the European Atomic Energy Community after Brexit. While the exit procedures under Article 106a of the Euratom Treaty are parallel to those in Article 50 of the Treaty of Lisbon, they are nonetheless independent.

"As part of the Brexit negotiations, the EU and the UK could agree that the notification procedures of the Euratom Treaty would be triggered, for example, three to five years after the notification under Article 50 is triggered. Such an approach would maintain trade, minimally impact new build, and ensure safety and security standards are continuously maintained, while - over a reasonable period of time - restoring the autonomy that the UK seeks. Whether or not such an approach will be politically feasible remains an open question," he said.

Research

Membership of Euratom is also a condition for Britain hosting what is currently the largest nuclear fusion experiment in the world. Based at Culham Centre for Fusion Energy in Oxfordshire, the Joint European Torus (JET) project involves some 350 scientists exploring the potential of fusion power, backed by funding from almost 40 countries in the EUROfusion consortium.

Ian Chapman, CEO of the UK Atomic Energy Authority (UKAEA), told WNN that leaving Euratom has "obvious implications" for the continued operation of the JET fusion experiment after the end of the existing contract at the end of 2018 and UK participation in Iter.

A collaboration of 35 nations and currently under construction in France, Iter is a magnetic fusion device designed to prove the feasibility of the fusion of hydrogen nuclei as a large-scale and carbon-free source of energy. The EU is funding half of the cost while the remainder comes in equal parts from six other partners: China, Japan, India, Russia, South Korea and the USA. The Iter fusion reactor will be JET's successor on the route to developing commercial fusion power.

Chapman said: "Our UK government sponsoring department, the Department for Business, Energy and Industrial Strategy, have made it clear that they are very supportive of the UK fusion program and will be working to find a way to continue to operate JET and remain part of Iter after we have left Euratom. We will be exploring all options to make this possible."

Asked how the UK's departure from Euratom would affect specifically private fusion energy ventures in the UK, David Kingham, chief executive of Tokamak Energy, told WNN: "The value of JET is unquestionable, it is still the world's leading fusion device, but it has been under threat of closure several times in the past. I hope the research at JET will not suddenly end in two years' time, but when JET does close the excellent work done there over the years will not be wasted. It has proven that megawatts of controlled fusion can be produced and it has created a wealth of fusion expertise in the UK."

He added: "As an agile, privately funded venture, Tokamak Energy is well placed to build on this heritage, bringing the UK closer to achieving nuclear fusion." Tokamak Energy is building a new tokamak, ST40, at its facility at Milton Park in Oxfordshire. Tokamak is a Russian acronym that stands for toroidal chamber magnetic coils.

"Recent advances show there is a faster route to fusion energy based on more compact devices; I believe the rapid development of new technologies by a variety of private ventures will help the UK put fusion energy into the grid by 2030," Kingham said.

"The UK's 50-year history in fusion research places us at the centre of a race towards a clean baseload energy source. It's essential to build on our successes to date and firmly establish an industry of real economic importance. Too often in the past the UK has failed with commercial deployment of our world-class science base; we must build on our leading position in fusion and not give up just at the point where major private investment is being attracted," he added.

Global implications

The World Nuclear Association said any actions taken regarding the UK's membership of the Euratom treaty as part of the Brexit process should include a smooth transition for its current nuclear industry, and allow its leadership as an international partner in new nuclear development to continue.

Agneta Rising, director general of the association, said, "The UK is an important market for new nuclear build, with companies around the world ready to bring billions of pounds of investment and provide thousands of jobs. The UK government should ensure this can continue efficiently and that any new arrangements work in harmony with existing agreements."

Nuclear energy build is "resurgent around the world", the association said, with 60 reactors under construction. The UK is set to be part of the global growth in nuclear energy, it said, with new build projects involving companies from Europe, Asia and America.

Today's nuclear industry is founded on partnerships between multinational companies, it stressed, and international trade in the nuclear industry is facilitated by agreements to allow the movement of nuclear goods, people and services.

The Euratom Treaty enables not only such trade within Europe, but also with countries such as Canada, Japan and the USA. It facilitates UK participation in long-term R&D projects, and it also provides a framework for international nuclear safeguard compliance, the association said.